New Delhi: Indians have deposited almost all the currency notes made illegal by Prime Minister Narendra Modi in 2016, the central bank said in a report after a count that lasted nearly two years.
Banks have received Rs 15.3 trillion ($217 billion), or 99.3% of the currency invalidated, the Reserve Bank of India said in its annual report on Wednesday. An amount of Rs 107 billion has not yet been received by the RBI after the cash ban, the report said.
The government had initially estimated about Rs 5 trillion of the Rs15.4 trillion rendered worthless on 9 Nov 2016 wouldn’t return to the system, indicating that this was cash stashed away illegally to avoid tax.
The cash ban had prompted the central bank to print new currency, reducing its profit and cutting annual dividend payout to the government by half last year. This year, it transferred Rs 500 billion to the government as dividend, compared with Rs 306.6 billion a year ago. RBI’s accounting year runs from July to June.
Modi’s decision to ban high-value currency notes, along with a chaotic introduction of the goods and services tax last year, acted as a drag on economic expansion. Growth has since rebounded and in the quarter ended March 2018, the economy expanded 7.7% from a year earlier.
By the end of August 2017, 99% of the banned currency had been deposited in banks: only approximately 14,000 crore of the total demonetised currency had been discarded, leading analysts to state that the effort had failed to remove black money from the economy. In June 2018, Reuters reported that all the farmers they had spoken to in Uttar Pradesh and Madhya Pradesh said that demonetization had made things worse for them.
The plan to demonetise the 500 and 1000 banknotes was initiated between six and ten months before it was announced, and was kept confidential, with only ten people being completely aware of it. The preparations for printing new 500 and 2000 bank notes began in early May 2016. The Union cabinet was informed about the plan on 8 November 2016 in a meeting called by the Indian Prime Minister Narendra Modi.